Export demand from neighbouring Pakistan is likely to support chilli prices, even as the new crop trickles in from Madhya Pradesh. Reports of lesser acreage in Andhra Pradesh and lower stocks of good quality chilli are adding to the firmness, traders said.
Rainfall in the key state of Andhra Pradesh during the last quarter of the year would be a critical factor in the pricing of the commodity, as too much cyclonic rains damage the crop and too little precipitation leads to lower yield. Cyclonic rains in December 2010 had inundated the chilli production area in the coastal Andhra Pradesh and destroyed the crop.
?The market has bounced back due to good buying from Pakistan. Reports of lower crop in Pakistan and Bangladesh is helping the Indian market,? Nalini Rao, research analyst at Angel Commodities said. Higher exports always translate into higher domestic prices due to lesser availability of the commodity. During the April-July period of 2011-12, chilli exports are seen lower by 38% in volume and 4 % in value. During 2010-11 a total quantity of 2,40,000 tonne of chilli valued at R1,535.54 crore have been exported as against 2,04,000 tonne valued R1,291.73 crore of 2009-10. Chilli exports has been increasing consistently during the past two years due to lower production in China.
?Lower stocks with farmers are also adding to the sentiments and we do not see any arrival pressure on the market. Some new crop has started trickling in from Madhya Pradesh,? Nalini said. Angel reports that the acreage in Andhra Pradesh is lower in the current season.
Faiyaz Hudani at Kotak Commodity Services feels that the market would remain firm in the near-term due to export demand. He feels that the rains during the coming months are very important.?We are not very sure about the quality of stocks held by farmers. It is reported that it is around 20-24 lakh bags. If the quality of chilli is lower, it would definitely affect the market,? he added.